Integrated Bus Terminal Cum Commercial Complex, Mohali

Transcription

1 Integrated Bus Terminal Cum Commercial Complex, Mohali Draft Report Presented to: C&C Constructions Ltd. May 2009

2 DISCLAIMER This document has been prepared for C&C Constructions Ltd. and the information on which it has been based has been derived from sources that we believe to be reliable. Whilst all reasonable care has been taken to ensure the facts stated are accurate and the opinions given are fair and reasonable, neither CB Richard Ellis, nor any director or employee of CB Richard Ellis shall in any way be responsible for the contents. All opinions and estimates included in this report constitute our judgment as of May, They are subject to change without notice and transactions should not be entered into in reliance upon the information, opinions and estimates set out herein. CB Richard Ellis specifically excludes any responsibility or liability whatsoever in connection with any purchases, disputes, developments or loss of profits arising from reliance on this report. The plot area, location and other information regarding the site have been provided by C&C Constructions Ltd. and CB Richard Ellis has not undertaken any verification/legal check on the title, ownership and the information provided has been assumed to be correct. Page 2

3 1.0 BACKGROUND & OBJECTIVES C&C Constructions Ltd., a prominent infrastructure company, has recently been accorded the status of a concessionaire for an Integrated Bus Terminal-cum-Commercial Complex in Mohali. The project has been initiated by the Government of Punjab through its nodal agencies namely, Punjab Infrastructure Development Board, Greater Mohali Area Development Authority and the Department of Transport. The project involves the Planning, Designing, Engineering, Finance, Construction, Development, Operation and Maintenance of the envisaged bus terminal along with the commercial complex on Design-Build-Operate-Transfer (DBOT) basis for a pre-determined Concession Period. The site identified for the above is located in Sector 57, Mohali, admeasuring approx 7 acres, with an FAR of 3 permissible for the commercial complex. Prior to commencement of construction of the integrated complex, the client wishes to assess the highest and best use for undertaking real estate development (across the investment grade commercial office, retail mall, hospitality, education & healthcare segments) at the subject site, with a view to undertaking an iconic development. In view of the above, CB Richard Ellis has been mandated to evaluate the development from a market & financial perspective and accordingly is pleased to assist the client in identifying the existing opportunities & consequently formulate an optimal development strategy for the subject development. Page 3

4 2.0 APPROACH & METHODOLOGY The detailed scope of work for the mandate has been highlighted below: Stage I ~ Market Study City/Region Overview As a prelude to assessing the real estate market dynamics, an overview of the identified real estate segments of Mohali & Chandigarh, hereafter referred to as the region, has been undertaken. This stage of the study was undertaken to identify the key location nodes within the region and thereby, establish the spatial direction of its growth, and also identify the prominent formats of development across the identified real estate segments. Location & Site Analysis Post undertaking the regional overview, a study of the subject location has been undertaken, to assess the possible catalysts and impediments for undertaking real estate developments at the subject site. A study of the profile of the subject micro-market, accessibility and linkages/ connectivity to key activity hubs, positioning of the location in the image hierarchy of the region, profile of existing developments in the vicinity that might bear an impact on the market dynamics of Page 4

5 the proposed project, review of development control norms such as height restrictions, zoning, Floor Space Index and ground coverage & general characteristics of the site. Real Estate Market Study In order to ascertain market dynamics of the identified real estate components for the land parcel, a comprehensive market research exercise has been undertaken across the region. The development trends have been studied across prominent establishments located/planned in the region across all the identified segments (Retail, Hospitality, Commercial, Healthcare, Education, Bus Terminal). This has been undertaken from the perspective of assessing the profile of existing formats and prevailing activity levels therein. The key parameters studied as part of the market study include enumeration of supply in Grade A formats, product mix details, scale & phasing of developments, target segments & positioning strategy, pricing trends, occupancy trends, profile of end users, current & future growth vectors and their respective drivers. The objective of this exercise was to assess the direction of movement of the various segments in the region in terms of type, size and quality of product offered. Stage II ~ Demand & Product Mix Assessment The approach for carrying out the Market Study has been that the constituent components were analyzed in isolation to arrive at an understanding of the market dynamics and assess the latent potential for each of the segments (i.e. Retail, Hospitality, Commercial, Healthcare & Education). The preliminary understanding of each segment formed the base, and projected synergies that prevail amongst the segments have been kept in perspective while preparing the development options for the subject site. Based on the inputs received from the above module, a demand assessment exercise has been undertaken, to determine the quantum of demand expected to accrue from the identified real estate components (as determined from Market Study phase) to the proposed development. Based on the findings of the market study exercise and the demand estimation exercise, alternate development options have been formulated for the subject site. These development options include the identification of the key components for the subject site, area scheduling for remaining components, phasing strategy & pricing strategy and projected absorption. Stage III ~ Financial Analysis In the final stage, post formulating alternate development options, detailed financial analysis (EBDITA Cash Flows) has been undertaken to determine the financial implications of the identified options. This analysis includes formulating income & cost assumptions for the identified real estate Page 5

6 components, development scheduling and phasing strategies, projecting cash flows over the project period for the various development options, and assessing project returns in Net Present Value (NPV) and Internal Rate of Return (IRR) terms This financial analysis enabled the identification of the most viable product mix for the subject developments from a market and financial perspective. Page 6

7 3.0 INTRODUCTION TO REGION The subject region, comprising Chandigarh and Mohali, has gained prominence over the years owing to its location in proximity to the National Capital Region (NCR) and presence of an administrative base for states of Punjab, Haryana, and for the union territory of Chandigarh. Chandigarh, the capital of Haryana and Punjab, is considered as one of the most well planned cities in India. The city was conceived by the famous French architect, Le Corbusier in 1953, comprising of 47 sectors developed across 2 phases. Owing to its developed social infrastructure and higher quality of life in comparison to other urban centres, the city ranks first in India on the Human Development Index 1. Further, the city also stands out in terms of economic parameters, with highest per capita income 2 of INR 141,863 (FY ), in the country. Due to its strategic location in North India along with superior infrastructure, it has witnessed continuous growth in its population base leading to corresponding growth in real estate activity. Owing to the sustained growth witnessed over the past two decades, Chandigarh has witnessed saturation in terms of availability of space, therefore, leading the real estate growth towards the adjoining regions (such as Mohali, Panchkula, etc.) with ample availability of land. The growth has spread primarily along 2 growth vectors ~ towards Panchkula on the South eastern fringe of the city and towards Mohali on its Western and South Western periphery. Mohali, also known as SAS Nagar (Sahibzada Ajit Singh Nagar), is an extended conurbation of Chandigarh, towards its south-west, in Punjab. Mohali was established as a result of majority of demand spill over from Chandigarh. The region has witnessed heightened level of interest from private developers, transforming the real estate activity towards organized segment. The population base has been increasing over the past 5-6 years, driven by increasing migration from surrounding regions, triggered by its proximity to Chandigarh, contemporary infrastructure and availability of cheaper land options. 1 Source ~ Chandigarh Administration Website 2 Per Capita income on urban population, Source: Indicus Data ~ City Skyline Premium Page 7

8 Mohali has witnessed rapid development recently, owing to initiatives undertaken by the Punjab Government such as providing land for real estate development to private developers, coupled with introduction of a new master plan for the GMADA (Greater Mohali Development Area Authority) area. Rising interest from national level developers have resulted in introduction of differentiated real estate offerings such as townships, integrated developments, etc. It may also be noted that the role of Panchkula in the extension of the city of Chandigarh is primarily restricted to the residential segment. In fact, Panchkula along with Chandigarh, is expected to witness a growing dependence on Mohali for social infrastructure. 4.0 REGIONAL OVERVIEW 4.1. EVOLUTION The overall northern region has evolved primarily due to the increasing prominence of Chandigarh, with the city emerging as an administrative hub in 1966 with the accordance of the Union Territory status. Owing to its status as a shared capital, the city primarily catered to government employees and hence emerged as a residential hub in the region. During inception, Chandigarh city was planned to house a population of approx. 150,000 across 30 low density sectors. However, with its growing prominence, its population exponentially increased and thus the city expanded by additional 17 sectors capable of housing an additional 350,000 people. As of date, Chandigarh also shares parts of Sectors 48 to 56, 61 and 63 with Mohali. Further, housing needs grew rapidly in Chandigarh with the increasing industrialization of the surrounding areas such as Baddi, Parwanoo, Lalru, Dera Bassi, Mohali, etc. thus positioning the city as a key residential destination for the neighbouring industrial hubs of the region. Commercial office segment activity in the city has been limited to offices of insurance companies, banks, regional offices, sales distribution centres, real estate developers, etc. The office activity primarily has been established in the CHANDIGARH sector markets which are non investment grade in nature, and offer SCO (Shop cum Office) format of development. However, in early 2000s with the emergence of tier II/III cities as potential IT/ITeS destinations, the region witnessed the establishment of Rajiv Gandhi Chandigarh Technology Park Page 8

9 in 2005 and Quark City in Mohali in With increase in activity across these developments, the region s positioning also transformed into an emerging IT/ITeS hub. In line with the existing trends witnessed in the commercial segment; the retail segment was also concentrated across sector specific SCO (Shop cum office) complexes. However, with increasing purchasing capacities of consumers, changing tastes & preferences rising interest levels of national developers in Chandigarh, there has been a spurt of activity in the organized retail segment with establishment of developments such as Fun Republic, DLF City Centre, etc. Though the master plan is recognized for its high quality urban planning, it does not provide for the development of malls and commercial buildings, and further development of hospitals and schools of any significant scale and standard; hampering the role of the private sector in the development of the above mentioned. Real estate development by private players is thus currently restricted to the Industrial Area (Phase I & II) and Mani Majra. On the western periphery of Chandigarh, real estate activity spread with primarily Mohali emerging as an industrial town owing to its proximity and availability of cheaper real estate options. This is also evident from the fact that Sectors such as 57 & 58 in immediate proximity to Chandigarh, witnessed the initial spread of industrial establishments. The industrial area of Mohali houses a large number of pollution free industries such as electronics, light engineering, auto components, etc. The prominent units that are established include Punjab Tractors, Phillips, Verka Milk Plant, Orient Craft, etc. apart from approx. 900 other small & medium scale industrial units. With the ever increasing need for setting up industrial units, sectors such as 72-73, 66, 66A & 66B were developed as expansion to the existing industrial sectors in Mohali. Simultaneously, Mohali also witnessed the emergence of the residential segment, attributable to spill over of demand from Chandigarh (due to limited availability of land and high real estate costs). The development witnessed initially was primarily in the same format of plotted developments prevalent in Chandigarh. To cater to the retail needs of the increasing residential catchment, sector markets were established offering SCO formats on ground floor. These Page 9

10 residential sectors have been serviced primarily by the sector markets (SCO complex) over the years. With the expansion of real estate activity towards Mohali, new growth vectors were identified in order to increase private developer contribution. The master planning of Mohali imitates the grid/sector format prevalent in Chandigarh. However, it not only incorporates the positive attributes of the latter s successful urban planning; it also recognizes the need for large format developments across commercial, retail, hotels, healthcare and educational segments. This is evident with the highly ambitious plans by the Punjab Government to develop Quark City (admeasuring approx. 51 acres) as an IT/ ITeS destination in the city. Further, with the new Greater Mohali master-plan for development of the region, growth of real estate activity has been envisaged along 2 primary axes ~ Chandigarh Kharar road and Kharar Landran road (also called Banur Road). With a direct access from Chandigarh, Kharar road has emerged as the prime vector for development and has witnessed healthy absorption levels and better revenue realizations, compared to other parts of the region. Number of national level (Emaar MGF, TDI, etc.) as well as regional (Bajwa, Gillco, etc.) developers have acquired large parcels of land for the development of integrated townships. These townships are envisaged to offer plots, SCO complex, retail mall, hotel, commercial office space, etc. and are expected to garner substantial interest in the short to medium term. Further, Kharar-Landran Road has witnessed the development of larger residential townships due to availability of large land parcels at relatively lower prices. Due to the larger scale of developments, the image of this vector is slightly higher than that of Kharar Road, and is expected to witness substantial interest in the medium to long term. Page 10

11 4.2. DEMOGRAPHICS Chandigarh Chandigarh is one of the newly formed cities in India. It currently has the status of Union Territory and is also the capital of Punjab and Haryana. Spread across 114 sq km., the city is one of the fastest emerging tier-iii cities across North India. Significant percentage of the total Chandigarh population resides in urban areas, with a high urban to rural population ratio of 9:1. Currently, the city hosts an urban population of approx. 0.9 million 3 and is known for its high standard of living. Parameters Value Land Area 114 sq km. Total Population ( ) 954,700 Gross Domestic Product INR 970,539 Per Capita Income ( ) INR 141,863 The city is enriched with a young working population; approximately 56% of the total urban population is between the age group of years. Chandigarh Urban Household (2008) ~ Annual Income 2 Income Categories (Household) No. of Urban Households < 150k 150k 299k 300k 499k 500k 999k > 1,000k Total 43,312 68,003 62,614 9,234 53, ,278 Chandigarh enjoys high employment rate of approx 88% leading to high income generation. Healthy income generation has been witnessed in the city with approximately 55% of the urban households falling under the income category of INR million. Further, high standard of living has been demonstrated by approx 22% of urban households with annual earning capacity of INR 1 million and above. 3 Source: Indicus Data ~ City Skyline Premium Page 11

12 Mohali District Mohali City (S.A.S. Nagar), known as an organic extension to Chandigarh shares similar demographics as the Union territory. Mohali district was carved out of the Rupnagar district in 2006, with the major constituents being the Mohali city, Derabassi, Kharar, and Zirakpur. The district had a recorded population of approx. 700,000, as per 2001 census. The urban population is approx. 39%, Parameters Value Urban Land Area sq. km. Total Land Area 1093 sq. km. Total Population (2001 census) 698,317 No. of households 132,000 majority of which resides in Mohali city. Mohali city s urban population as per 2001 census was approx. 125,000, and estimated at approx. 200,000 in No. of households in Mohali district are approx. 132,000. Mohali district has witnessed a high literacy rate of 78% as compared to approx. 70% of Punjab state. Further, Mohali has witnessed a higher urban literacy rate of 86% compared to an average of 79% for Punjab state. Page 12

13 4.3. INFRASTRUCTURE EXISTING INFRASTRUCTURE The tri-city region is strategically located at the intersection of the two prominent Indian states of Haryana & Punjab. Its proximity to Delhi, Himachal Pradesh, Punjab and Haryana is complemented by presence of superior infrastructure in terms of connectivity to these regions. A. Air The city is connected with major urban and commercial centres in India by way of its domestic airport, which is located at the south-western region of the city. Located approx. 11 Kms from the Central Business District, the airport is serviced by prominent airline operators such as Jet Airways, Indian Airlines, Jet Lite, Kingfisher, etc. Further, the domestic airport is undergoing expansion, to be developed as an international airport, in order to transform the region s positioning & image as an emerging business hub in Northern India. B. Rail Chandigarh enjoys superior rail connectivity with all major cities and towns across Northern India, with certain specialized trains such as the Shatabdi Express, providing high speed connectivity to Delhi. Additionally, rail connectivity with cities such as Allahabad, Lucknow, Chennai, Shimla, etc. also contributes to the city s status as a prominent hub within the region. C. Road An extensive road network provides connectivity and facilitates trade & other economic activities with other commercial centres in the region. The National Highway 21 runs through the heart of the city, connecting the region with Ludhiana, a trading and manufacturing hub in Punjab. Further NH 1, a key link road from Delhi to the border city of Amritsar is also in close proximity to the tricity. Further, two Inter State Bus Terminals (ISBT), Sector 17 and Sector 43, service the movement of people, from various towns and cities in the northern region of the country UPCOMING INFRASTRUCTURE INITIATIVES Mohali, the satellite town of Chandigarh, is fast emerging as the new architecturally-planned and modern green city of India. The Punjab government has embarked upon an ambitious composite plan (including mega projects worth INR 12,000 crores) to develop Mohali, as a hub for new IT ventures, attracting interest from large MNC s, NRI s and PAN India realtors. With the aim to establish Mohali as a world class city with state-of-art infrastructure and facilities, the Punjab government has prepared a new master plan in collaboration with Jurong Corporation, a Singapore-based town planning company. Page 13

14 A number of infrastructure initiatives such as well-planned roads, sewerage, power and water supply by the Greater Mohali Area Development Authority (GMADA) are under various stages of development in order to reinforce Mohali s position as a planned city. Further, infrastructure initiatives are also aimed at spreading development activity towards the emerging growth vectors in the periphery of Chandigarh-Mohali (such as Chandigarh-Kharar Road and Kharar-Banur Road), thus providing impetus to business activity in these regions and positioning Mohali as a future integrated destination. A. Road Linkages The Greater Mohali Area Development Authority (GMADA) has undertaken widening, strengthening and up gradation of roads to facilitate easy connectivity and support real estate growth in the region. Proposed Mohali Phagwara Expressway ~ a proposed km six-lane expressway connecting Mohali to Phagwara, is envisaged to connect Mohali International airport with Amritsar International airport by National Highway 1. The envisaged project is expected to be developed under Public Private Partnership (PPP) at an approximate cost of INR 50 billion, developing approx. 3,000 acres of land. The proposed expressway is expected to reduce the travel time between Mohali and Phagwara from the present two-and-a-half hours to just one hour. Further, a five-kilometre economic corridor on both sides of the highway promoting agri-export zones, special economic zones, industrial parks, etc. has been planned, in order to provide a fillip to the industrial activity in the region. Page 14

15 Widening of road from Sector 48 to the expressway, along Sector 66 ~ the Greater Mohali Area Development Authority is currently undertaking the widening of road (to 200 feet) from the Border Road Task Force (BRTF) site in Sector 48 to the road connecting NH-21 to the airport, alongside Sector 66. Widening of Kharar-Banur Road ~ the project includes widening of the 40-km Kharar- Banur-Tepla road into a 9-km four-lane project at a cost of Rs 109 crore, expected to be complete by The project forms a part of the revamp activity undertaken by GMADA to renovate the existing road infrastructure. Proposed road connecting Knowledge City to Kharar-Banur Road ~ a 6-km road has been proposed from the Knowledge City (sector-81) to Kharar-Banur Road by the Greater Mohali Area Development Authority (GMADA). This will enhance connectivity for the Kharar Banur Road to other vectors of the tricity as well as form a part of the link road leading towards Rajpura, Patiala, Bhatinda, etc. B. Airport Linkages Proposed International Airport at Mohali ~ the extension of the existing domestic airport at Chandigarh city is proposed to be developed as an international airport in order to provide additional support to the existing Delhi & Amritsar international airports. The Page 15

16 expansion is envisaged over an area of approx. 300 acres, including expansion of the existing runway from 900m to 1,500m, and the construction of a new passenger terminal building along with development of other supporting infrastructure. C. Rail Linkages Development of MRTS (Mass Rapid Transit System) ~ a proposed metro rail project linking Chandigarh and Mohali with the peripheral areas such as Panchkula, Ropar, Baddi, etc. is expected to further enhance the positioning of Chandigarh as a regional economic and financial hub. The MRTS project is expected to include seven corridors covering a distance of approx. 87 Km. The proposed first phase of development is expected to include 36 Km covering the tricity. Table: Stating proposed Union Territory (UT) Metro rail plan Regions Covered Chandigarh, Mohali, Panchkula, Zirakpur, Dera Bassi, Baddi, Barotiwala, Kalka IT Park to Mohali, Sector 105 along Purv Marg Khuda Lahora-Sarangpur to Meheshpur (eastern side of Panchkula) Proposed Corridors Proposed Terminals (Phase1) Mohali Sector 66 to Sukhna Lake Sector 14 (PU) to Mohali Sector 93 along Vidya path Dadu Majra to Zirakpur/ Airport mainly along Dakshin Marg Zirakpur to Panchkula Bus stand Khuda Lahora to IT Park with a loop to Panchkula ISBT-17, 43, PGI, Bus Stand, Panchkula, Mohali and Chandigarh's railway stations, IT Park, Airport, Manimajra motor market, etc. D. Other Initiatives Proposed Modern Bus terminals ~ Punjab Infrastructure Development Board (PIDB) has proposed to develop three modern fully air-conditioned bus terminals across Mohali, Bhatinda and Patiala. The development work would be undertaken on BOT basis and is expected to encompass facilities such as shopping malls, office complex, hotels, food courts, etc. Furthermore, the Punjab Transport Ministry has proposed to revamp and modernize the existing 32 bus stands across the state. The envisaged modern bus terminals are expected to support entertainment and hospitality industry in the medium to long term. Page 16

17 Knowledge City ~ the State government and the Union government have plans to develop approx. 400 acres as knowledge city in sector 81, hosting large and reputed institutions such as the Indian Institute of Science Education and Research (IISER), the Institute of Nano- Science Technology (INST), ISB and the Biotechnology Cluster. Proposed World Trade Centre (WTC) ~ a WTC has been proposed by the Punjab State Import Export Corporation (PSIEC) in Mohali, over approx. 9 acres. Proposed Golf Course, Sports Complex, etc. ~ a Golf Range has been proposed by the GMADA (currently under-consideration) in Sector 48, Mohali. The envisaged development is expected to offer facilities such as club, restaurant, swimming pools, etc. Further, another golf course spreading across approx. 290 acres in Sector 91 and 93 has also been planned. These developments are expected to enhance the existing sports facilities in the Mohali district. Super-Specialty Cancer Hospital ~ Max healthcare recently won the bid for the 200-bed facility health care centre in Phase VI, Mohali. The project is expected to be developed through PPP mode (public-private partnership) by Max Healthcare at the cost of INR 113 crores. Sewerage Treatment plants ~ a ten MGD capacity sewerage treatment plant is currently under consideration by the GMADA to limit environment pollution in the Mohali region. Page 17

18 5.0 SITE & LOCATION 5.1. LOCATION ANALYSIS/SPATIAL SPREAD The subject site is strategically located at Verka Chowk, at the beginning of the Chandigarh Kharar road (NH 21) with superior access from Chandigarh and Mohali. The strategic location of the site would enable it to serve as a destination for residential catchments of Chandigarh and Mohali. The entire stretch of Kharar Road is currently witnessing high quantum of real estate development across integrated townships such as Gillco Valley, TDI Township, Sunny Enclave, etc. comprising plots, apartments, SCOs, hotels, etc. The vector is also expected to witness development of a high-end mall, Treasure Island, in proximity to the subject site, slated to be completed by Chandigarh Kharar Road (NH-21) To Ropar Kharar The site is surrounded by the industrial area of Mohali, which houses prominent business establishments such as Ranbaxy, Dell, Verka, etc. The industrial area is expected to witness further growth owing to lower land cost vis-à-vis Chandigarh Industrial Area. Further to the industrial area is the residential hub of Mohali, spread across Phase 1 to 11, sectors 69, 70, 71, etc. These sectors typically comprise plotted developments, similar to the observed trend in the region, along with the sector markets offering retail and commercial options. Chandigarh Kharar Road also provides direct access between Chandigarh and other important cities in the neighbouring states of Punjab, Haryana and Himachal Pradesh. This has resulted in high inter-state traffic along the National Highway 21, resulting in ideal positioning for a transit bus terminal along with a commercial complex at the subject site. Sunny Enclave Gillco Valley 120 Treasure Island 121 NH-21 TDI Township Kharar Banur Road Chandigarh Mall Matrix, Shalimar Plaza Industrial Quark SEZ Mohali NH Residential Page 18

19 5.2. SITE ANALYSIS/SITE CHARACTERISTICS LOCATION The subject site has superior access from all important hubs of the region, viz. direct access from Chandigarh & established areas of Mohali, along with other regions of Punjab such as Roopnagar, Ludhiana, etc. It has frontage on three sides which provides excellent opportunity for undertaking an integrated development PROPERTY DESCRIPTION The subject site is an approx. 7 acre vacant land parcel, with FAR of 3 allowed for development of various real estate options as part of the commercial component. Total Built-up area available is approx. 900,000 sft. The subject site constitutes a bus terminus-cum-commercial complex with approx. 78,000 sft dedicated to the bus terminal component. The remaining built up area can be utilized for commercial complex incorporating components such as retail, hospitality, commercial office, etc. Landmark Distance (km) Chandigarh City Centre (Sec 17) 10 Chandigarh Railway Station 18 Chandigarh Domestic Airport 14 Mohali City Centre (Sector 62) 5 Page 19

20 5.3. SWOT ANALYSIS Strengths Frontage on all three sides provides the subject site with multiple access Proximity to Chandigarh and established residential catchments of Mohali expected to enhance subject site image Subject site benefits from being a popular address owing to high level of publicity of the Modern Bus Terminal Weaknesses Subject site is located within the precincts of the Mohali Industrial Area which may negatively affect the image of the proposed development ~ an iconic development positioning would provide a significant fillip to the image of the subject development, thereby overcoming the above constraints Opportunities Subject site lies on an emerging growth vector ~ location dynamics have supported growth in real estate development along the vector in terms of large scale integrated townships with various real estate segments such as residential, retail, hospitality, etc. Direct connectivity to Mohali Airport proposed for up gradation, from a 4-lane to a 6-lane wide road Threats Upcoming supply across all real estate components in townships along the Chandigarh-Kharar Road will act as possible future competition to subject development Subject site is located within the precincts of the Mohali Industrial Area which may negatively affect the image of the proposed development Page 20

21 5.4. SITE PHOTOGRAPHS Page 21

22 6.0 REAL ESTATE MARKET STUDY 6.1. RETAIL SEGMENT OVERVIEW In line with the planned format of the city, retail activity in Chandigarh has traditionally been concentrated across the Shop Cum Office complexes adjoining each sector. The primary hub for retail activity has been the Sector 17 market; which has been designated as the City Centre. Format of retail development has been primarily high street in nature with typical tenants including both domestic & international brands such as Titan, VIP, Raymonds, Music World, Nike, Nautica, Lacoste, etc. While outlets in the city centre primarily catered to the apparel and luxury items segment, other prominent sector markets (such as 8, 9, and 35) have a focus on food and beverage outlets, departmental stores, housing brands, etc. Prominent outlets in these markets include KFC, Compaq, McDonalds, Giovanni, Career Launcher, Lenovo, etc. Over the years this retail format has witnessed tremendous response in the city, evident from the increasing rentals and reduced vacancies in these sectors. The trend is complemented by the culture prevalent, the demographics and the profile of residential catchment across the city. In comparison to high street formats, organized retail activity in Chandigarh is currently in its nascent stages, with three private developer malls operational in the city. Fun Republic, Chandigarh s first shopping mall, inaugurated in 2003, was the first such initiative towards facilitating a transition from the prevalent high-street format to organized retail formats in the city. In addition, national developers such as DLF & Uppal have recently launched City Centre in Rajiv Gandhi Chandigarh Technology Park and Centra in Industrial Area I respectively. As these malls have come up in the transition phase of the retail cycle, they are yet to capture the same level of demand for vanilla retail tenants as exhibited by the high street options in the sector markets of 17, 35, etc. However, these malls have witnessed high footfalls primarily generated on account of multiplex, food-courts and entertainment components. Similarly, Mohali has witnessed retail activity in the sector markets, although the scale and profile of the retail formats has been different from Chandigarh, owing to difference in the profile and demographics of the resident population. These sector markets have been primarily established to cater to the residential catchment in adjoining sectors. Initial activity has been witnessed across sectors in close proximity to Chandigarh, although positioned differently in terms of profile of tenants and rentals achieved. Lack of options in sector markets of Mohali and proximity to high street options in Chandigarh have further resulted in high demand levels in the latter s retail activity. However, there is scope for private developers to capture this unmet demand, in the form of organized retail format across Page 22

23 Mohali. Further, the lack of superior retail options in Mohali in sector markets (unlike Chandigarh) creates an opportunity, in short to medium term, for the organized mall format to develop as the primary mode of retail in the city. Keeping the above in perspective, a few private developers have shown interest in Mohali and currently there are a few projects under various stages of development in the organized retail segment. Developers such as Parsvnath, EWDPL, Shalimar Estates, etc. are few of the developers who have evinced interest and are undertaking the development of Mall Matrix, Treasure Island and Shalimar Mall respectively SPATIAL SPREAD High street retail options are spread across Chandigarh with sectors 17, 35, 22, 8 and 9 housing the more prominent SCO complexes. Sector 17 continues to be identified as a shopping-cumentertainment hub of the city, followed by sector 35 & 22 for Food & Beverage options. Organized retail mall format has been concentrated primarily in close proximity to Rajiv Gandhi Chandigarh Technology Park towards the eastern end of Chandigarh. The completed retail malls are located in Mani Majra and the industrial area of the city, in close proximity to the IT/ ITeS hub, railway station, ISBT, etc. The region is well serviced by a combination of the sector markets well spread out across Chandigarh and the organized formats witnessed in the Eastern end of the city and recently in Mohali. Mohali has recently witnessed initial developer interest to develop organized retail formats, with a few projects under various stages of development. Following with the trend observed in the region, the initial spurt in activity has been witnessed in proximity to the IT/ ITeS hub of Quark City in the city. Further, development of organized retail formats in future is expected to be witnessed along the growth vectors of Chandigarh Kharar road and the Chandigarh Banur road. Primarily the retail options on these vectors are envisaged to be a part of the integrated townships, which are under various stages of development. Page 23

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25 ORGANIZED RETAIL EXISTING RETAIL STOCK Initial organized retail activity in the region was witnessed in 2003, with the launch of Fun Republic mall located in Mani Majra. Over the years the level of activity has been Completed Retail Supply (2009 YTD) ~ 0.46 mn sft very gradually picking up, with three developments being introduced during the previous year (2008). Till now, organized retail activity has been restricted to Chandigarh in the region. Within Chandigarh, maximum supply has been witnessed within DLF City Centre, located in RGCTP. The industrial area has also witnessed larger formats of retail developments owing to availability of suitable land parcels in the region. Industrial Area 37% Mani Majra 20% RGCTP 43% Chandigarh has witnessed a total of approx million sft of operational investment grade retail space, across Fun Republic, DLF City Centre, Uppal Centra and Tricity Centre. Vacancy level within these developments is currently at approx. 35% owing to several reasons highlighted below: Completed Retail Supply/Absorption ~ 2009 YTD In sft 500, , , ,000 Fun Republic (90,000 sft) 90,000 DLF City Centre (190,000 sft) 446, , ,250 Vacancy in Chandigarh ~ approx. 35% 292, ,000 90,000 0 Upto YTD S upply Absorption Firstly, the region witnessed a manifold increase in supply during 2008, with approx. 80% of the current stock introduced in the market in the last two quarters, thereby not having had adequate time for marketing of the project so far. Secondly, the launch of these developments coincided with the onset of the economic recession in the country, as a result of which a number of end users aborted expansion plans, for example, Spencers backed out of its pre-commitment to fully occupy the Tricity Centre Mall (56,300 sft) in Q Page 25

26 The region is well serviced by the retail options available as SCO formats in the sector markets. Cumulatively, the prominent sector markets contribute approx. sft of space, out of which approx. 85% - 90% is currently absorbed. Further, the transition of preferred retail destination from high street to shopping malls have been relatively slow indicated by the low footfalls seen for vanilla retail outlets. However, the gradual acceptance of the mall format can be elucidated through the significantly higher footfalls now being witnessed for the entertainment and F&B options provided as a part of the retail malls. Given below is a list of prominent organized retail developments in the region. Development Name Location Saleable Area (sft) Year of Establishment Occupancy Fun Republic Mani Majra, Chandigarh 90, % DLF City Centre Uppal s Centra Tricity Centre RGCTP, Kishangarh, Chandigarh Industrial Area I, Chandigarh Industrial Area I, Chandigarh 190, % 110, % 56, % UNDER CONSTRUCTION SUPPLY The region has significant supply in the pipeline with approx. 1 million sft under construction across five developments, out of which approx. 0.6 million sft is expected to get completed in the current year. Majority of under-construction supply in the region (approx. 70%) has been witnessed in Mohali, owing to ample land availability and lower land costs compared to Chandigarh. Under Construction Supply/Pre Commitments ~ 2009 YTD million sft Supply Pre-commitments Page 26

27 In Mohali approx. 40% of under-construction supply is expected in Sector 74 in close proximity to the IT/ ITeS hub of Mohali viz. Quark City. The trend observed is similar to the development pattern witnessed in Chandigarh, with majority of supply located in close proximity to the IT/ ITeS hub of RGCTP. Large scale format developments, representing the remaining 60%, are located on the growth vector of Chandigarh Kharar road, the most prominent one being Treasure Island. The under construction developments in the region have witnessed pre-commitments to the extent of approx. 50% 4. These pre-commitment levels have been reflective of the ongoing economic downturn, along with the location of the upcoming developments in interiors of an industrial sector (Sector 74). Further, these developments lack substantial residential or working catchment in close proximity, which is critical for the success of small format retail developments. The only prominent development in the region, Treasure Island, is currently in the process of signing up with the key tenants including multiplex & food court operators, hyper market, anchors, etc. Given below is a list of under construction developments in the region. Development Name Location Saleable Area (sft) Expected Completion Precommitments Realtech Emporio Industrial Area I, Chandigarh 250, % TDI Mall Sector 17, Chandigarh 85, % Mall Matrix Sector 74, Mohali 150, % Shalimar Plaza Sector 74, Mohali 130, % Treasure Island Chandigarh-Kharar Road, Mohali 403, % 5 4 Pre-commitments for projects due for completion during The marketing initiative for the development has commenced recently and the developer has an understanding with the Future Group (Big Bazaar) for the hyper market space(103,000 sft), though the tie up is yet to be formalized, post which the development would be pre-committed to the extent of approx. 25%. Page 27

28 RENTALS The industrial area in Chandigarh has witnessed majority of the supply and the highest level of quoted rentals owing to its proximity to the prime areas of Chandigarh coupled with high real estate cost (land costs and conversion costs). Average quoted rentals witnessed for ground floor vanilla space is approx. INR 180 INR 200 per sft per month. At RGCTP, ground floor rentals at DLF City Centre are approx. INR per sft per month. In Mani Majra, quoted rentals are unavailable due to the absence of vacant units in Fun Republic. In Mohali, malls located in proximity to Quark City are quoting approx. INR 130 per month per sft on an average for ground floor vanilla space, whereas, on Chandigarh-Kharar Road, Treasure Island (located 800m from the subject site) is quoting approx. INR 150 per sft/ month for vanilla retail spaces on the ground floor. It may be noted that while these are the rentals being quoted, actual transactions are expected to take place at 10%-20% lower rates due to the current economic conditions. The region has witnessed higher rentals across high street formats 6 in Sector 17, Chandigarh, with rentals ranging from INR per sft/ month. Rentals in other retail hubs are considerably lower, for example in Sector 35 rentals are approx. INR 250 per sft/ month, whereas that for similar options in Sector 22 is approx. INR 200 per sft per month. Rentals in other prominent markets such as those in Sector 9 & Sector 8 range from INR per sft per month. In the prominent SCO complexes of Mohali, such as Sectors 59-61, the rental ranges from INR 90 INR 110 per sft per month. 6 Quoted rentals for prime, ground floor spaces, quoted in terms of saleable area Page 28

29 GROWTH VECTORS Page 29

30 PLANNED SUPPLY Owing to the characteristic of Chandigarh retail market, there is limited scope envisaged in terms of further development of retail malls in the city. Further, coupled with rising land prices and unavailability of feasible land parcels, the development potential is expected to shift towards Mohali. Due to saturation of real estate within Chandigarh, Mohali has been catering to the rising demand for residential and retail space in the region. There are a significant number of townships under various stages of development in the region, primarily located on Chandigarh Kharar road and the Chandigarh - Banur road which are perceived to be the future growth vectors for real estate development. Given below is a list of prominent developments under various stages of planning. Development Developer Location Mall Melange (Redevelopment of Dara Studio) Mohali Mall Majestic Properties Suncity Projects Sector 56, Mohali Chandigarh-Kharar Road, Mohali Westend Mall Chadha Group Kharar-Banur Road, Mohali Retail spaces planned as part of Gillco Valley Retail spaces planned as part of Golf Links Gillco Group Ansals API Kharar-Banur Road, Mohali Kharar-Banur Road, Mohali Magnum Opus Fashion Technology Park Sector 90, Mohali Retail space as part of integrated development IT Mall Larsen & Toubro ECC Parsvnath Industrial Area I, Chandigarh RGCTP, Kishangarh, Chandigarh However, it may be noted that as these developments are in the planning stages, the timeline to market is expected to be in the range of 3-5 years. Page 30

31 OUTLOOK The evolution of organized Mall format retail has been very gradual in Chandigarh due to the extremely strong high-street culture within the city, which have also been serving as the retail hubs for Mohali till date. The popularity of the organized developments in Chandigarh has been on the rise primarily due to the F&B and entertainment options such as the multiplex, food-courts, etc which are offered as part of the development. The residential populace of Mohali is currently being catered to by the sector markets in Chandigarh as the sector markets in Mohali are relatively small and in addition even the more prominent sector markets of Mohali are not comparable to those of Chandigarh in terms of tenants, overall profile, etc. Accordingly, there is significant scope for the development of medium to large format retail hubs in Mohali in order to capitalize on these dynamics. Further, there is significant potential to tap the entertainment needs of the affluent population in Chandigarh by incorporating lifestyle based entertainment components such as multiplexes, bowling alleys, gaming zones, etc. as part of large format destination based retail developments. Page 31

32 BENCHMARKING ~ Treasuree Island Located approx. 800 mts. from the subject site, Treasure Island is an integrated development which comprises a large format shopping mall (approx. 0.4 million sft) and a 120 key 4 Star hotel. It is promoted by EWDPL (Entertainment World Developers Pvt. Ltd) ), who are actively involved with similar developments across various tier II/III cities such as Indore, Jabalpur, Raipur, Thiruvananthapuram, Udaipur, etc. The development incorporates a hyper market, multiplex, anchors and a large Food & Beveragee section. Further, it also provides for an entertainment component apart from the multiplex. Location Map Project Overview: Treasure Island Developer Location Project Status Year of Commencement Year of Completion Saleable Area Entertainment World Developers Pvt. Ltd Chandigarhh Kharar Road Under Construction ,000 sft Retail 403,000 sft Hospitality 140,000 sft Page 32

33 Building Structure 4 B + G + 9 Retail - LG + G + 3 Hospitality G (lobby), 4-9 Parking 3 basements Product Mix Retail 403,000 sft Anchors Hyper Market Vanilla Multiplex Entertainment Food & Beverages 78,000 sft 103,000 sft 99,000 sft 46,000 sft 30,000 sft 47,000 sft Hospitality Parking 140,000 sft 225,000 sft Hotel Operator Not tied up Site Layout Typical Floor Plan Performance Parameters End user absorption 0% Rental INR 150 per sft per month Currently the developer is in advanced stages of finalization with Future Group (Big Bazaar format) for their hyper-market space, however the details are yet to be finalized. Page 33

34 6.2. HOSPITALITY SEGMENT OVERVIEW Hospitality sector in Chandigarh & Mohali has historically been a part of the SCO complexes. Maximum room stock in the region has been witnessed across small scale developments, without a star rating, with approx rooms in each development. Prominent hotels as part of SCO complexes include Piccadilly and Sunbeam. Room Keys ~ approx. 3,400 Planned 5% Under Construction The region exhibits characteristics of a reasonably mature 36% market with approx. 60% of the total stock complete. However, most of the existing room stock has been witnessed across the unorganized sector in the form of converted SCO bays. Majority of the demand is catered by the unorganized sector, comprising hotels such as Piccadilly, Metro-35, KLG, etc. Completed 59% The organized hospitality sector is in nascent stages with only two 5 star hotels operational in the region, viz. Mount View and the Taj and two 4 star hotels viz. Shivalik View and Park View. The region has witnessed substantial quantum of under-construction room supply, with Chandigarh catering to primarily 5 star developments and Mohali witnessing the introduction of organized supply in form of 4 star developments. Overall, there is a shortage in terms of the available room keys in organized hotel developments. The need arises owing to the region being a political and business hub for the neighbouring states. Also, the development of the Chandigarh & Mohali Industrial Areas, Rajiv Gandhi Chandigarh Technology Park, Mohali IT hub in Sector 67, etc. is expected to result in additional demand for room keys by prominent industry players SPATIAL SPREAD Maximum concentration of the unorganized room supply in Chandigarh has been witnessed along the Himalaya Marg, in sectors such as 17, 22, 35 and adjoining sectors of 7, 10, 24, 26 & 34. Primary demand driver for these hotels are the commercial hubs of Sector 17 and 34 owing to presence of maximum commercial stock in the region. Similarly, Mohali has witnessed maximum supply in Phase 9 & 10, with approx. 100 room keys, owing to demand generated from the Mohali Cricket Stadium, Fortis Hospital, various government offices of Punjab government & Mohali administration, etc. Page 34

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36 EXISTING HOTEL ROOM STOCK The region has historically witnessed high quantum of supply in the hospitality sector across the budget segment. Budget hotels are prominent in SCO complexes and largely form a part of the unorganized sector owing to limited organized players in the market. Room keys across budget hotels have witnessed steady growth over the years, with a CAGR of approx. 9% ( ). Recent development of such hotels has been witnessed in sectors such as 43 in Chandigarh and 63 & 64 in Mohali and the total room stock is approx. 1,550 rooms Cumulative Room Stock 7 ~ Chandigarh + Mohali 1,800 1,500 1,200 1,102 1,154 1,258 1,459 1,530 1,544 mn sft Upto YTD Luxury Budget Luxury segment in Chandigarh was introduced in 2005, with Taj setting up 150 rooms, post which Mount View was also accorded a 5 star status. Collectively, these hotels have contributed approx. 300 rooms in the region. Over the previous years, Mohali has not witnessed supply across the luxury segment, owing to the lack of demand in the city. Mohali has limited supply of room keys with approx. 160 rooms in the low budget category. Prominent hotels in Mohali include Sarao Hotel (Phase 10) and Hotel Majestic (Phase 9). 7 Based on existing regional market dynamics the luxury segment has been categorized to comprise of 4 & 5 star rated hotels Page 36

37 Prominent Completed Developments Development Name Location Segment Year of Establishment Room Keys Mount View Taj Shivalik View Piccadilly Hotel Majestic Aroma Sun Beam Sarao Hotel Sector 10, Chandigarh Sector 17, Chandigarh Sector 17, Chandigarh Sector 22, Chandigarh Sector 63, Mohali Sector 22, Chandigarh Sector 22, Chandigarh Sector 64, Mohali Luxury Pre Luxury Luxury Pre Luxury Pre Budget Pre Budget Pre Budget Pre Budget UNDER CONSTRUCTION SUPPLY YoY Under-Construction Room Stock ~ Chandigarh + Mohali mn sft Luxury Budget The region is witnessing high level of under-construction activity across the organized hospitality segment owing to the growing significance and promotion of the region as a commercial and IT hub in the North. This has led to widespread interest from national as well as international operators, evident from the quantum of upcoming developments. Several known brands such as Page 37

38 Sarovar, ITC, Lalit, Marriot, etc. are undertaking development of room keys to form part of the organized activity across the hospitality segment. The luxury segment is spread across Chandigarh with three under-construction 5 star hotels in the segment, namely Sheraton (Industrial Area), The Lalit (RGCTP) and Marriott (sector 35 B) contributing approx. 620 rooms. Additionally, under-construction 4 star hotel in Chandigarh includes James Sarovar Park Plaza, Sector 17, contributing approx. 130 room keys. The budget segment is expected to witness significant quantum of supply across the region, with developments expected in the industrial area of Chandigarh. Projects such as Sarovar Hometel, KLG, City Heart, etc. are expected to contribute approx. 210 room keys by Unlike Chandigarh, Mohali has not witnessed any supply in the 5 star segment owing to the image positioning of the city. However, it is witnessing development of three 4 star hotels, contributing approx. 370 room keys, located in proximity to the Mohali Industrial Area. Additionally, a 40-room budget hotel is also expected as part of the retail development. Most of the supply mentioned above forms part of integrated mall developments namely; Treasure Island and Mall Matrix (ITC). Sarovar Portico with approx. 120 rooms being developed by Vipul is the only standalone underconstruction development in Mohali. Overall, Mohali is witnessing an increasing share in the region contributing approx. 34% of the total under-construction room keys. Prominent Under-Construction Developments Development Name Location Segment Year of Establishment Room Keys ITC (Mall Matrix) Sarovar Hometel The Lalit James Park Plaza Uppal s Marriot Sarovar Portico Sector 74, Mohali Chandigarh Industrial Area I RGCTP, Chandigarh Sector 17, Chandigarh Sector 35, Chandigarh Sector 74, Mohali Luxury Luxury Luxury Luxury Luxury Budget Page 38

39 AVERAGE ROOM REVENUE / OCCUPANCY Chandigarh as a hospitality hub has witnessed healthy occupancy levels over the years, with occupancy levels averaging approx. 75% across all segments. However, as expected, occupancy level for the luxury segment in Chandigarh has been affected by the recent economic downturn and has fallen from approx. 75% to 65-70% in General market feedback indicates demand shifting to budget hotels due to cost cutting measures adopted by commercial segment in recessionary times. Budget hotels have experienced higher occupancies (vis-à-vis luxury segment) of approx. 80% in 2009, dropping from approx. 85% in the previous year. Typically, hotels with lesser number of rooms and located in prime sectors of Chandigarh such as 22, 35, etc. are still witnessing higher occupancy of approx %. Demand for the segment has been witnessed primarily from the business travellers (approx. 80%), with preference to stay for short duration of 2-3 nights. Average Room Revenue across the luxury segment has two distinguishable ranges with Mount View at INR 4,500 and Taj at INR 6,800. ARR for CITCO hotels viz. Shivalik View and Mount View ranges between INR 3,000 4,500. ARRs for budget category in Chandigarh range between INR 1,500 2,000, however Mohali has witnessed lower ARRs in the range of INR 1,000 1,500, owing to inferior quality developments and lack of basic facilities GROWTH VECTORS Planned Supply With the luxury & budget segment expected to witness growth in Chandigarh, there is significant supply of hotels planned on the future growth vectors of Chandigarh Kharar road and the Chandigarh Banur road. Majority of the supply is expected as part of the planned townships by developers such as Ansals, Emaar MGF, TDI, etc. However, these projects are still under planning stages and their positioning and other operational details are yet to be announced in the public domain. Additionally, these projects are expected to enter the market only in the next 4-5 years. Other proposed hotel developments in the region include a 5 star hotel in the Mohali City Centre, Sector 62, land banks held by the Alchemist Group and Larsen & Toubro for the purpose of hotel developments in the Chandigarh Industrial Area and a 5 star 170-room Sheraton in Chandigarh Industrial Area II. Page 39

40 Growth Vector Map Page 40

41 MARKET OUTLOOK Chandigarh being an important political and commercial hub, witnesses high demand for the hospitality sector. According to Chandigarh Industrial and Tourism Development Corporation (CITCO), 75 80% of their hotel room demand is from business travellers. Additionally, Chandigarh is the transit point from Delhi to most regions in North India, making it a high potential region for hospitality. Further, the current occupancy levels in majority of the developments in Chandigarh have exhibited strong resistance to the recent market downturn and have remained relatively stable vis-à-vis developed markets such as Delhi, Gurgaon, etc. Healthy occupancy levels coupled with reasonable achievable ARRs leave scope for further activity in the hospitality sector in the city. Currently, Mohali has very few organized players in the market catering to demand for hotel rooms. The current demand is catered to by the low-end SCO format hotels due to lack of better alternatives. Further, IT/ ITeS activity is expected to grow once the market revives, which would further increase demand for room keys in the region. Page 41

42 BENCHMARKING ~ Taj Chandigarh Taj, Chandigarhh is currently the only organized hospitality brand operating in the region. It was set up in 2005, located in the CBD of Chandigarh and has currently enjoys a monopolistic advantage in the region owing to its first mover advantage. Approx. 80% of the clientele of the hotel is the corporate traveller. Site Photograph Location Map Taj Chandigarh Project Overview: Taj Chandigarh Location Project Status Category No of keys Year of Completion Facilities Sector 17, Chandigarh Completed 5 Star Banquet/Conference Facility 4 banquet/conferencee halls of various sizes Business Facilities 24 hours businesss centre, wi-fi connectivity, meeting rooms, secretarial service, law library, audio visual equipment Other facilities Restaurants & Bars, Fitness centre & Spa, Swimming pool, Shopping arcade, Beauty salon Performance Parameters Occupancy ARR (Average Room Revenue) 70% INR 6,800 Page 42

43 BENCHMARKING ~ ITC Hotel, Mall Matrix ITC has undertaken the development of a 4 star business hotel as part of the integrated mall development Mall Matrix. This is part of the understanding between Parsvnath and ITC to build and operate 50 hotels across the country. The hotel is expected to cater to the corporate demand from companies such as Ranbaxy, Punjab Tractors, Dell, Quark Media, etc. as well as upcoming IT/ITeS SEZs and Parks in proximity. Envisaged Developments Location Map ITC Hotel Project Overview: ITC Hotel Location Mall Matrix, Sector 74 (Phase VIII), Mohali Industrial Area Project Status Under Construction Category 4 Star Business No of keys 132 Year of Completion 2009 Facilities - Performance Parameters Occupancy ARR (Average Room Revenue) N/A N/A Page 43

44 6.3. COMMERCIAL OFFICE SEGMENT (IT & NON IT) OVERVIEW Historically, commercial activity in the region has been concentrated across SCO complexes (typically consisting of retail spaces on the ground floor and office on the upper floors) which have developed within each sector. The prominent sectors catering to office demand are sectors 17, 8, 9 and 34 (the sub CBD dedicated as the commercial hub for Chandigarh). Small scale businesses and services dominate the commercial activity across these sector markets. These commercial hubs offer relatively lower quality space and are characterised by absence of basic facilities such as central air-conditioning, maintenance, elevators, etc. Over the last 4-5 years, the region, by virtue of being a low cost destination along with having a large manpower pool, has gained prominence as a tier III IT/ ITeS destination. With the State Government actively promoting the region as an IT/ ITeS destination, many prominent IT/ ITeS companies such as Infosys Technologies Ltd., Wipro Technologies Ltd., Tech Mahindra Ltd., esys Technologies Ltd., Bharti Airtel Ltd have set up their campus facility in the region. Most of the IT/ ITeS activity in Chandigarh has been concentrated in Rajiv Gandhi Chandigarh Technology Park, Kishangarh, a Government initiative. The technology park offers land to IT/ ITeS companies for campus facilities as well as offers built to suit facilities. In addition, DLF group has developed a multi tenanted building (MTB) housing prominent tenants such as Infosys, IBM Daksh, Net Solutions, Outerbay, Virsa Systems, and ICICI Prudential. Following the IT/ ITeS development in Chandigarh, Punjab Government has also undertaken adequate initiatives to provide fillip to the growing IT industry. A 51 acre IT/ ITeS hub has been planned and implemented in Mohali sector 74, known as the Quark City. The project witnessed reasonable response from IT/ ITeS companies such as Quark Media, Dell, etc. to set up campuses. Total Supply ~ approx. 3 mn sft Non-IT commercial demand in Mohali has been captured by the SCO complexes in the sector markets of Phase 3B2, 5, 7, etc. The graph represents total activity in the commercial segment as of date. The market is in its nascent stage with high quantum of organized supply expected in the market in the future. Approx. 30% of the supply is operational with the remaining 70% supply expected in the short to medium term. Planned 37% Completed 29% Under Construction 34% Page 44

45 SPATIAL SPREAD Prominent commercial sectors of Chandigarh, viz. 17 & 34 have typically witnessed demand from Government institutions, local businesses, etc. while other sectors of 8 & 9 typically cater to the financial sector including banks, insurance companies, real estate developers, etc. Commercial activity in Mohali is currently limited to the SCO complexes in sectors 57 61, 63 and 70. These are largely low-end and have traditionally witnessed higher vacancy vis-à-vis SCO complexes in Chandigarh. Investment grade commercial activity in Chandigarh is primarily concentrated in Rajiv Gandhi Chandigarh Technology Park (RGCTP) and the Chandigarh Industrial Area. Commercial developments comprise of primarily BTS format facilities with limited space across Multi-tenanted Buildings. However, Mohali has witnessed limited investment grade commercial activity, primarily concentrated in Quark City (Sector 74 75) and Mohali IT Park (Sector 67). Page 45

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